Questions about Webhosting, Webdesign, eCommerce

Factual Questions
1

Hi there

I’ve recently come across a potential opportunity to buy discounted gift certificates. Being the genius entrepreneur that I am, i figured that I might be able to resell them for a small profit. My problem is that the quantities sold would be small, the margins thin and the long-term potential of the business very slim.

That is why pre-built solutions such as Yahoo or eBay’s stores are very unappealing to me. But let me tell you what you need and get your opinions on my best course of action. My needs are very, very simple.

1-Customer enters my website.
2-Customer clicks one of several buttons ($10 GiftCert, $15 GC, $20 GC, etc.) and is subsequently taken to paypal’s website where he can send me the amount.
3-Customer Receives email with a unique 16-digit code that he can then redeem at leisure.

Step number one is easy enough. I need to find a webhosting place, make a basic HTML file with some text and links to a few GIF files (for the buttons I mentionned) and upload it to the webhosting place. I expect I’d have to pay $100 a year or so for the privilege which is a bit steep. Unfortunately, free hosting solutions such as filefarmer.com and fileh.com (owned by the same people I believe) tend to be slow and highly unreliable.

Step number two shouldn’t be too hard either. PayPal has a step-by-step thingie to help generate HTML code for the “Add to Cart” button. I suppose it would only be a matter of pasting this in my HTML file .

Step number three is where I’m utterly stomped. How can I store my 16-digit codes so that each time a purchase is made, one of them is instantly emailed to the customer? I have a feeling that this last step is exponentially more difficult than the first 2. I could, of course, dispense with this and simply send the codes manually once I receive the PayPal notification of payment. It just wouldn’t be as convenient for the customers and I’d like to keep them happy assuming I get any customers :slight_smile:

If this works out and my supply doesn’t dry out prematurely, I’m guessing that I would be operating with around $50 profit / month at first and working my way to $200 / month after a year or so at the very most. So yes, it would be a very small business but it would also require very little time and effort which is always nice. My main concern is to keep my investment WAY down.
And that’s all the info I thought to share. if you have any suggestions about any of this, I’m wide open.

As always, thank you for your time!

Gozulin

2

Why don’t you just hock them on eBay? They now have a fixed-price option if you don’t want to go through the traditional auction route.

3

What’s your business plan? It seems to me you are concentrating on only a small aspect (bare bones expenses in order to maximize profit) and forgetting the bigger picture.

I’d go the eBay route as mentioned by friedo. Unless you put in the time and effort to do it correctly, anything else will make your site look like Slick Willie out to scam people. Of course, you’ll still make money but I doubt nothing like you envision.

4

To do that, you’d need to invest in some server-side scripting probably using PayPals IPN (instant payment notification) system. Unless you have a decent amount of experience in a server-side scripting language, it’s not going to be very easy.

Also, IPN isn’t always instant or 100% reliable. It can have issues when your server or their server is under a lot of load. A website I work for lost about 5 notifications just a week or so ago.

Also keep in mind that PayPal takes a cut, too… something like 5%. (I can’t remember exactly.) Hopefully that leaves your profit margin at least a few micrometers wide. :smiley:

If you’re interested, I could probably set something up for you for a small fee. Feel free to PM me!

5

Thanks for the replies. Unfortunately, they are not of any help.

I was already planning on selling on eBay (Else how would I get exposure) but eBay charges insertion fees and final sale fees. These fees are quite significant in thin margins like mines would . Therefore I was going to include advertisement for my webstore in the email with the gift certificate to people who won my bids.

I think a good 10% of them would start buying exclusively from my store if they could get the codes immediately, from a reliable seller.

Let me demonstrate:

Let’s say each $50 code cost me 25 bucks. I also pay $1.20 to start an ebay listing at $44.99, $0.10 to list it on a schedule, $0.20 to add Buy It Now @ $49.99. That’s $1.50 that I will pay EACH TIME I list. No matter whether it sells or not!

Now, let us suppose half my items sell (reasonably hypothesis). That’s $3 for each sale. To that, let us add the selling fee of 3.9% (I’ll round it to 4% for the sake of simplicity). That’s another $2. So ebay eats $5 out of every sale. Paypal eats another 3% + $0.30 which comes to $1.80.

Bottom line: For every sale, I would theoretically make $18 in net profit. eBay would take an extra $5 I could have had. that’s 28% of my profit!!! Rather a lot if you ask me. And it’d probably be worse, for every $44.99 sale I make on eBay (probably the majority), I would only get $$13 and eBay would be eating 38% of my profit! So you see why I’m interested in the store idea. I’d still pay PayPal fees but I’d save on eBay fees and avoid price dumping on eBay.

PS: this reply was written hours ago, before ToniF replied.

Another reason to use the store is because the less I list on ebay, the better. If I list too much, then prices will go down and make it unprofitable for me (and all other fellow sellers of the same line of products). Even listing lots of buy it now will create a negative effect as people will think that the product is abundunt and they can buy it whenever they can (As opposed to “right now while his auction exists!”.

On the other hand, in a webstore, there are no such market pressures. Nobody knows your stock nor the amount of demand you enjoy. Let me demonstrate

6

Oops. There will be no demonstration. I forgot to delete that passage.

About the reliability issues that Tonif mentionned:

It’s ok by me if the server misses the rare notification and doesn’t give the code to the customer. As long as I am able to make sure the code didn’t get delivered once the customer complains, I can always send it to him manually. What would be unacceptable would be giving the code without the notification but I’m fairly certain this could not happen accidentally.

7

Try these scenarios …

You decide to sell widgets. You buy the land, build a store, and advertise. Folks stop buy and a few of them purchase. You have a large monthly overhead that after a few months you find you cannot meet because the store is in a lousy location and your ad budget isn’t enough. You go bankrupt, liquidate your stock and move on as best you can.

– Or –

You rent out a store location where the rent is low. You tie your advertising with the property owner, even though that reduces the profit margin. However, the ready-made advertising gives you instant access and recognition to many customers you would never have on your own. Though your net profits are not as high as you would like, you build your reputation with quality goods and great customer service. In time you’ve saved enough cash, built a reputation and learned the business just enough you open a second new store. Your customers come with you and your business manages on its own.

Since you are a, “genius entrepreneur,” I’m sure you know best.

8

Try posting your project idea on www.rentacoder.com or www.elance.com

People post requests for projects on there that I would only do (as a professional coder) for 10-20 times what they’re willing to pay…but apparently some folks are willing to work for those peanuts. You might be able to find someone to help build what you need for whatever you’re willing to pay.

9

I had written a lenghty and elaborate reply to you but I lost it. Here is the abbreviated version:

I’m not sure what point you’re trying to make with your stories, please clarify. I was joking when I called myself a genius entrepreneur :rolleyes:

10

Some folks live in 3rd world countries where wages are much lower than they are here in the U.S I imagine.

Rent-a-Coder definitely seems like a useful resource to me. Thanks for the suggestion.

11

OK, here goes. Are you that comfortable with your web skills so as to have total control over your web site technical administration and management (profit maximization because you can do all the work and troubleshooting yourself), or are you willing to reduce that profit level for a while and have others manage your technical administration at very low cost to you (sell it on eBay)?

12

“for a while” implies that I would leave eBay at some point and do what I’m talking about doing right now. That’s exactly how I plan to do it.